Blue Apron BB #:292398 had a good thing going…about 2.5 years ago. Now, almost two years after the company went public, it’s at risk of being delisted from the New York Stock Exchange due to low share value.
The company’s shares were valued at just 72 cents at the end of business on May 28.
The New York-based meal kit company was one of the largest and most recognizable in the market, with a heavy investment in marketing. Many pointed to that high cost of enticing subscribers and low retention as major red flags, but the company was bullish on its chances with an Initial Public Offering in June 2017.
Shares were offered around $10 each, and immediately dropped in value.
At the same time, Amazon announced its purchase of Whole Foods Market, and many meal kit companies started looking at retail as a path to growth.
Blue Apron launched several attempts at working with retailers like Walmart’s Jet and Costco, eventually adding an abbreviated kit of spices and recipes without the perishable ingredients, but it seems that the company’s days are numbered.
The move is intended to bring the company’s share value above $1. A company is delisted from the NYSE for share values below $1 for 30 consecutive days. Blue Apron has been below $1 since May 2.
But is retail the place for meal kits to thrive? There’s been a lot of activity over the past few years.
Albertsons bought Plated. Kroger launched Prep + Pared, then spent $200 million on Home Chef. Regional players started adding kits like Chef’d and HelloFresh, seeing an avenue to consumer demand for quick and easy at-home meals without the cost of subscriptions.
But, to me, there’s a sense of desperation. I see people hawking HelloFresh subscriptions at the movie theater and street fairs next to the MLM sellers with fingernail polish, Tupperware, and leggings. Retailers carrying meal kits have relegated them to the bottom of a case around the corner from prime merchandising space.
The latest acquisition in the market, Del Monte-backed Purple Carrot, was acquired by Oisix ra Daichi Inc., a Japanese organic food delivery service for only $30 million, including a $17.2 potential earn-out through 2021. Del Monte put $4 million into the company a year ago.
I recall a panel I attended at the National Grocers Association convention in 2018. It was supposed to be a discussion of retailer success with meal kits, but none of the panelists could actually say they’d been successful with them. One, a Manhattan-based grocer, seemed like a perfect fit, but had only sold a couple hundred units in the first several months.
I see a lot of prepared foods at retail, but none of the innovation I’m seeing lately could be what I consider a “meal kit.” Most of the innovation is more like heat and eat, which is fine, but that’s not a “meal kit.”
There’s nothing to do. There’s nothing to learn. It’s a TV dinner, made appealing because of advances in packaging and shelf life that allow for a better eating experience.
I know a lot of people are still bullish on the idea of meal kits, but I think they’re going to have to have some fundamental change, like diet specialization and serious packaging innovation, to remain relevant not only for consumers, but for retailers as well.
Blue Apron’s rise, and demise, isn’t a huge confidence-builder for those that remain.